BMW likely to take $1.1bn charge in EU antitrust probe

Bloomberg

BMW AG said it’s likely to take a charge exceeding 1 billion euros ($1.1 billion) related to the European Union’s investigation into German automakers allegedly colluding to delay the rollout of cleaner-emission cars.
The provision will drag on first-quarter financial results and reduce automotive profit margin this year to as low as 4.5 percent, according to a statement. BMW said it’s contesting the allegations “with all legal means,” but that it’s probable the European Commission will issue a significant fine.
The EU announced in September it had opened a probe into BMW, Volkswagen AG and Daimler AG over suspected collusion that could have delayed clean-emissions technology for cars, and sent the manufacturers a statement of objections earlier. The commission laid out allegations that the automakers participated in a cartel to limit or delay two types of technology for diesel and gasoline cars. Companies can contest the charges before the EU makes a final decision, which usually brings heavy fines.
“European consumers may have been denied the opportunity to buy cars with the best available technology,” EU Competition Commissioner Margrethe Vestager said. While companies can cooperate to develop better cars, EU rules “do not allow them to collude on exactly the opposite: not to improve their products.”

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BMW, which said its Ebit margin may be as much as 1.5 percentage point lower than its target for at least 6 percent this year, may suffer worst from any fine.
Daimler said it doesn’t expect a fine because it was the first to tell the EU about the cartel, it said in an emailed statement. Volkswagen has previously said it sought a fine reduction for helping regulators and said it will review the EU’s objections and respond as part of its cooperation with authorities.
A maximum fine may be “in the area of high triple-digit millions,” Evercore ISI analysts wrote in a research note. “BMW could be hit particularly hard,” they said.
The probe represents another challenge for the German auto industry, which is grappling with the fallout from revelations in 2015 of VW’s diesel-cheating and the disruptive shift to self-driving, electric cars. Allegations of a cartel emerged in Germany’s Spiegel magazine, which reported that VW, Daimler and BMW met starting in the 1990s to coordinate activities related to vehicle technology, costs, suppliers
and strategy as well as diesel-emissions controls.